Lender Redlining

[twaddle]

Whole ZIP codes defined as 'high risk' -- themorningcall.com

Critics call it the new redlining: Many of the country's largest mortgage lenders are imposing loan restrictions in entire counties or ZIP codes that they rank as risky or ''declining.''


Enter your zip code here:

ResCap Market Indicator Portal

My area is "low risk," but I hear WaMu just downgraded most of the Seattle area to "soft."

 

[al_bundy]

they aren't refusing to lend, they are just requiring higher downpayments

 

[DangerMouse]

Hmm my neighbourhood in San Diego scores a D which only surprises me because I thought it would be lower.

 

[Marquette]

Can anyone show some zip codes that aren't Ds?

We've tried several and they've all come back as grade D

 

[REWahoo]

Can anyone show some zip codes that aren't Ds?

67215
87115
78209

 

[Marquette]

Thanks.

Oh, and 90210 is a D

 

[brewer12345]

Mine was a C.

 

[TeeRuh]

I didn't get a letter grade I got:

Grade for the property in ZIP Code xxxxx is Low Risk

(I guess they don't know about the chiggers, cockroaches, rattlesnakes, hurricanes, ...)

 

[W2R]

Oh, goodie.

My zip code (which is one of the more affluent and stable in the New Orleans metro area) ranks a "C", elevated risk.

Maybe it's a good thing that I owe nothing to anyone and never intend to borrow again! But I suppose it will still affect my insurance costs.

 

[Outtahere]

Mine was a C in northern MA

 

[al_bundy]

mine is a C, but here in NYC to buy a coop you need at least 10% to 20% down anyway so it's not that big a deal

 

[FUEGO]

Low risk here in the great void between Miami and Northern Virginia/DC.

 

[FANOFJESUS]

KC Zips

Every zip code in KC is a C even if it is great or has a two by four across the door.

 

[youbet]

Looks like the lenders are between the proverbial rock and a hard place. By requiring higher down payments in some areas, they are referred to as "punishing" or "penalizing" home owners and prospective buyers. But if they continue to give loans with very low down payments they're considered capricious and not good fiduciaries of depositors' money.

I find it hard to consider the requirement for a 20% downpayment in an area considered ripe for huge drops in value to be "punishment." Sounds more like reasonable business sense.

BTW, I entered a few suburban Chicago zips and all came up C.

 

[happy2bretired]

The Grade for the property in ZIP Code XXXXX is Low Risk
as of February 12, 2008 11:12:00 AM CST​

 

[brewer12345]

FWIW, a lot of this is being driven by Fannie, Freddie and the mortgage insurers. Most big lenders don't keep the loans they make, so they have to be able to sell them to someone. They used to do this via securitization, but until this market reopens Fannie and Freddie are pretty much the only game in town. So when Fannie & Freddie start pulling back on low downpayment loans, everyone else follows suit. And since the availability of high CLTV piggyback loans is pretty much gone, the only way to do a low downpayment loan is with mortgage insurance. The mortgage insurers are now in control much more than they were, so they are raising prices and becoming ore discriminating in their underwriting, because they can.

 

[cantlogin]

Low risk in my neighborhood too.

 

[poboy]

Low risk also.

 

[haha]

Low risk also.

I put in the zip south of mine. It varies from expensive lakeside homes to beater bad dope dens closer to town.

Rated "low risk" anyway.

I believe these ratings must be backward looking. If prices start coming off, more of these areas likely will be higher risk.

Ha

 

[jIMOh]

Can anyone show some zip codes that aren't Ds?

We've tried several and they've all come back as grade D

45150 (C)
14450 (low risk)
45140 (C)

 

[twaddle]

I put in the zip south of mine. It varies from expensive lakeside homes to beater bad dope dens closer to town.

Rated "low risk" anyway.

I believe these ratings must be backward looking. If prices start coming off, more of these areas likely will be higher risk.

Yeah, as I mentioned, WaMu is a bit ahead of the curve. They've already downgraded all of Seattle by one notch. But then they may be a bit more sensitive to risk taking than other lenders.

We're seeing how a credit crunch gets implemented. Money is cheap, but lenders are getting tighter. Fannie and Freddie are making their guidelines tougher, and all lenders will have to follow suit.

What's interesting is that the government is asking Fannie to increase their conforming loan limit just as Fannie is whining about their "prime" portfolio taking an "unexpected" credit default hit.

 

[megacorp-firee]

Mine was a C.

 

[mike hall]

37774 = low risk

 

[zoey]

Mine was a C (96720)

 

[clifp]

C here in Hawaii, and most of the zipcodes I could remember from Silicon Valley.

Isn't this a bit like closing the barn door after the cows have left?